Pay Dirt Series – Hidden Traps in Mortgage Renewals

Mortgage renewals are a somewhat hidden part of the MIC mortgage business.  They’re not typically discussed when the mortgage is being originated, and they’re usually handled directly by the lender so the brokers don’t often get involved.

It’s important that brokers know the renewal terms of the lenders they’re dealing with.  Watch for:

  • Big renewal fees
  • Increased interest rates
  • New appraisal requirements
  • Other documentation
  • Other renewal charges

It can reflect badly on the broker if the lender becomes a loan shark at renewal time.

What do you do if a lender doesn’t offer your borrower a renewal?  While not common, this does happen.  The only option is to find another lender, and unfortunately your borrower will have pay all of the associated costs again.  A mortgage is a contract for a set term.  Once that term expires there’s no obligation on the lender to renew.

When dealing with MIC’s, make it a point to ask what their renewal policies and fees are.  If you’re trying to decide between competing mortgage offers, this may help make the decision easier.